New Delhi: Despite high expectations by the industry from the new government, rating agencies don’t think that 9 per cent growth will be possible at least in the next 2-3 years.
“Although the worst appears to be over, it is unlikely that the Indian economy will migrate to a high growth phase of around 9 per cent over the next two-to-three years,” said India Ratings and Research (Ind-Ra) in a report on Monday. It said that the RBI believes India’s potential growth rate may have fallen to around 7 per cent from over 8 per cent after the global financial crisis. The agency believes the economy, at this point of time, is delicately balanced and requires a serious policy push to return on the high growth path.
“The government policy will have to address the weak demand faced by several manufacturing sectors on one hand, and the supply bottlenecks that have emerged in the agricultural/infrastructural sector on the other,” said the agency. It kept its FY15 gross domestic product (GDP) growth forecast unchanged at 5.6 per cent.
Another rating agency Crisil also in its report dismissed the possibility of India growing over 9 per cent in next few years.
“We believe India can grow faster over the next five years, but nowhere near the 9 per cent in its heyday. There is a 50 per cent chance growth will average 6.5 per cent over this period, provided the government gets a decisive mandate in the ensuing general elections, which will hopefully speed up decision making, improve the investment climate and competitive efficiencies,” said Crisil in a recent report.
On the other hand, the report said that if India misses a decisive mandate or a viable coalition after the battle of the ballot, a sustainable lift to growth won’t materialise.
“The odds of being caught in the 5 per cent rut then rise to around one in three,” it added.
However, industry has high expectation from the new government. “The level of expectations from the new government has risen to an all-time high, never seen in the last two decades from India Inc which is setting different sets of agenda for the new Prime Minister from revival of economic growth to fixing inflation," said industry chamber Assocham.
